Supporting families at risk of poverty and improving outcomes for children are at the heart of a funding package totalling more than £7.5 million.
The Scottish Government investment spans three key programmes, each designed to address the root causes of child poverty and give families the tools they need to thrive.
The funding for 2026-27 is:
£2.2 million for the Whole Family Support through General Practice (WFSGP), doubling its reach to more families across the most deprived parts of Glasgow. The programme supports families to increase wellbeing, and build financial resilience
£4.2 million to strengthen NHS Scotland’s employability opportunities and deliver 200 placements for job seeking parents, helping them develop the skills and confidence needed to enter or return to the workforce
an additional £1.1 million for the Family Nurse Partnership, enabling the programme to reach up to 500 additional parents. It supports young first-time parents often facing challenging circumstances to connect with community resources and to improve their financial situations.
We are committed to eradicating child poverty in Scotland.
Our new Tackling Child Poverty Delivery Plan builds on progress and sets out a broad range of actions to help parents.
The package forms part of the Scottish Government’s new Tackling Child Poverty Delivery Plan 2026-31 which aims to support parents to increase their incomes and reduce the burden of everyday costs, on top of existing work, helping to keep an estimated 100,000 children out of relative poverty in 2026-27.
This builds on existing Scottish Government action which has already reduced relative child poverty rates in Scotland to the lowest levels in almost a decade – with rates nine percentage points lower than the UK in 2023-24.
We want to ensure that no child in Scotland grows up in poverty.
Watch First Minister @JohnSwinney as he explains what we are doing to eradicate child poverty and provide whole family support. pic.twitter.com/F7zeJGhl8g
Announcing the investment at Peat Road Medical Practice, in Glasgow, Public Health Minister Jenni Minto said: “Tackling child poverty is the Scottish Government’s top priority and we want every child to have the best possible start in life.
“That’s why this package of funding is so important. It will enhance and expand three highly impactful programmes which will help families access support, fair work in the NHS, and reduce child poverty.
“This support will allow these three invaluable projects to continue to grow and help even more families across Scotland.”
Dr Elizabeth Bryden, GP at Peat Road Medical Centre, said: “We are delighted that the Scottish Government has extended funding for Whole Family Support through General Practice into 2026/27.
“The project helps to reduce inequalities linked to deprivation and enables children and families to reach their potential.
“Being involved in the Whole Family Support programme has made a significant difference to the families in our practice. Our Family Wellbeing Worker has used their knowledge and experience to connect families with community resources and patients place a great deal of trust in them.”
Tackling Child Poverty Delivery Plan 2026-2031 published
New support for parents to increase their incomes and reduce the burden of everyday costs, on top of existing work, will help to keep approximately 100,000 children out of poverty in 2026-27.
More than £111 million is being committed to updated plans to eradicate child poverty through Bringing Hope, Building Futures.
It builds on existing Scottish Government action which has already reduced relative child poverty rates in Scotland to the lowest levels in almost a decade – with rates nine percentage points lower than the UK in 2023-24.
Action includes:
Investing £61.5 million in the Tackling Child Poverty Fund to strengthen and introduce measures, including to expand childcare support for low-income parents, help employers offer progression opportunities, grow the Family Nurse Partnership to help up to 500 more young parents during pregnancy and into parenthood, and to expand Bookbug
A £20 million Whole Family Support Third Sector Delivery Fund for charities to help families in their communities
£30 million to boost incomes through work, create more training opportunities for parents by investing in the college sector, and to reduce transport costs for low-income parents travelling to work
£9 million to mitigate the UK Government’s freeze on Local Housing Allowance rates, which caps the amount of housing support a household can receive, to support up to 18,000 families
Social Justice Secretary Shirley-Anne Somerville said: “Eradicating child poverty is the Scottish Government’s driving mission – no child should live in poverty in a country as rich as Scotland.
“This plan builds on a great deal of progress and sets out a broad range of actions to help parents – by reducing the cost of living, helping increase incomes received through work and social security, and helping their children to thrive.
“I am proud that Scotland is the only part of the UK to have statutory targets to drive down child poverty, which were unanimously agreed by parliament.
“Our plan focusses on concrete action this year while providing the foundations on which any incoming administration can build and reflect its own policy priorities, working with industry, local authorities and charities, to give children in Scotland a future free from the scourge of poverty.”
£5.8 million to charities and partners to bolster whole family support across 2026-27
Seven projects delivering in communities will share £5.8 million of funding to drive transformation in whole family support.
First Minister John Swinney announced the funding during a speech on eradicating child poverty at Centrestage in Kilmarnock, East Ayrshire. He highlighted the need for charities and government to streamline collaborative efforts to eradicate child poverty, making it easier for people to access support.
The seven recipients of the grant will provide support for families, scale up efforts to tackle child poverty, and improve early child development.
This support is part of the £50 million Whole Family Wellbeing Funding allocation for 2026-27, building on the Scottish Government’s significant investment of £148 million in that Fund since 2022.
The Scottish Government’s Tackling Child Poverty Delivery Plan, which will set out further actions to reduce child poverty, will be published on Thursday.
First Minister John Swinney said: “Eradicating child poverty is my top priority and as a result of our bold action, child poverty rates are lower in Scotland than anywhere else in the UK.
“No child should have to worry about essentials such as food or a warm home because of circumstances beyond their control. While child poverty has reduced, even one young person growing up in poverty is one too many.
“My government is focused on building a support system that is seamless and tailored, that responds flexibly and quickly to people’s needs – and offers the right support at the right time.
“A total of £5.8 million in Whole Family Wellbeing funding will be directed to seven projects that exemplify the type of transformational support required for families across Scotland.
“I am proud that the experiences of children and families are at the heart of our forthcoming Tackling Child Poverty Delivery Plan, which will be set out in Parliament this Thursday. We are charting a path to work in harmony with charities and the third sector so that systems come together as one, providing a brighter future for children across the country.”
Dundee City Councillor and Convener of the Fair Work, Economic Growth & Infrastructure committee Steven Rome spoke about the Dundee Pathfinder Fairer Futures Partnership, which is among the recipients of this latest funding.
He said: “The Dundee Pathfinder is a collaborative effort to support families experiencing poverty. By drawing on local expertise, the Pathfinder has brought more than £2.4 million into households since October 2022.
“This is helping many people move into employment and training, improving the lives of entire families.”
Supporting parents and improving kids’ health and wellbeing
More children across Scotland will have access to free after school activities as part of the government’s national mission to tackle poverty.
The Scottish Government’s Extra Time Programme, delivered in partnership with the Scottish Football Association, supports local football clubs and trusts to provide free before school, after school and holiday activity clubs to primary school children from low income families.
Last year up to 5,000 children across 28 local authority areas were able to attend regular services which provide childcare options for their parents.
The 2026-27 Scottish Budget is increasing investment to expand delivery and reach of after school services, building on the success of the Extra Time programme, in areas where it is required for families most in need.
First Minister John Swinney met pupils benefiting from after school activities provided by Hibernian Community Foundation as part of the programme.
First Minister John Swinney said: “We know that families greatly value the services provided through the Extra Time Programme, which extend the school day, helping parents enter and sustain employment.
“The clubs are also hugely popular with children, enabling them to take part in football and other activities, learn new skills and access healthy food – helping improve their physical and mental wellbeing.
“The Scottish Government has supported the successful delivery of the programme through grassroots football clubs and trusts across the country, working closely with schools and community organisations.
“This is an excellent example of how we are improving outcomes for families and delivering on my priorities for Scotland – tackling poverty and growing our economy.”
Social Justice Secretary Shirley-Anne Somerville has said the draft Scottish Budget 2026-27 is a “landmark intervention” in the Scottish Government’s drive to tackle the root causes of child poverty and increase living standards.
Around £8 billion has been earmarked for the social justice portfolio, boosting support for vulnerable people and low-income families.
This includes plans to:
introduce a new premium element of the Scottish Child Payment in 2027- 2028, raising weekly payments for eligible parents of children under the age of one to £40 per child, benefitting around 12,000 children
create a new £50 million package to boost whole family support. This will further enhance existing support and will include help with transport, skills, and commits £20 million for third sector partners to deliver the support that people need in their communities
increase the Tackling Child Poverty Fund from £12.5 million to £61.5 million in 2026-27
invest £7.2 billion in social security, supporting disabled people, unpaid carers, those on low incomes and others, while also providing help with energy bills
Social Justice Secretary Shirley-Anne Somerville met parents in receipt of any of the Five Family Payments, including the Scottish Child Payment, on Thursday (15 January) at Pilton Youth and Children’s Project, and said: “Eradicating child poverty is this government’s driving mission – no child should have their prospects hindered by circumstances beyond their control.
“This Budget is a landmark intervention in our work to tackle the root causes of poverty and reduce the pressure on household finances – from increased support for Scotland’s newest parents, to new initiatives to help increase household incomes and ensure families receive the right support at the right time.
“With more than £330 million committed across three years to our Tackling Child Poverty Fund and to investment in Whole Family Support, we are laying the groundwork to drive continued progress in the year ahead, breaking the cycle of poverty in Scotland for good.”
Two-child limit mitigation funding for 2025-26 reinvested to tackle child poverty
More support will be available to families and households to help cover the cost of life’s essentials and to deal with emergencies.
First Minister John Swinney has confirmed that £10 million originally earmarked in 2025-26 to support the two-child limit mitigation payment in Scotland will be reallocated to tackling child poverty.
The majority of the funding will be split between charities and government programmes that provide emergency financial support, including:
£5.5 million additional funding for the Scottish Welfare Fund. The fund is administered by local authorities and provides people on low incomes with emergency grants if they are facing crisis, homelessness or other housing or caring challenges
An additional £0.55 million for Aberlour Children’s Charity and £1.5 million for Children First to provide extra emergency support to families in crisis
£1.5 million for the Corra Foundation to distribute additional emergency funds via local organisations
A further £1 million will support various strands of the Scottish Government’s national Child Poverty Delivery Plan 2022-2026, including parental employability schemes, funding to support women back into the workforce, additional investment into the King’s Trust’s NHS employability programmes, and targeted support for households experiencing homelessness.
Visiting children’s charity Children First, First Minister John Swinney said: “When I became First Minister, I said that I will pursue priorities that will make Scotland the best our country can be, and the most important priority that I have pursued in government has been that of eradicating child poverty.
“We have made progress. Scotland is the only part of the UK where relative child poverty rates fell in the last year. Our investment in a more dignified and generous social security system, funded childcare, free school meals and free bus travel for under-22s is putting more money in families’ pockets.
“However, as we start 2026, there are still far too many children in Scotland growing up hungry, or cold, and unable to reach their full potential. That is unacceptable.
“Today’s announcement will provide some immediate short-term relief for individuals and families facing the most challenging of circumstances. Our local authorities and charities have well-established means of getting support out quickly to people in need.
“Next week we will set out in more detail our intention to put tackling child poverty at the heart of the next Scottish Budget and I look forward to unveiling landmark interventions to drive this work forward.”
Chief Executive of Children First, Scotland’s national children’s charity, Mary Glasgow said: “These funds from the Scottish Government will allow Children First to offer life changing and immediate support to thousands of children as part of the national mission to eradicate child poverty.
“Through our national support line we will be able to reach more children and families to offer the financial, practical and emotional support they need to improve their circumstances and tackle the hardships they face in the short and longer term.
“Any family in Scotland in need of help can contact Children First’s friendly, specialist support line team 365 days a year by calling 08000 28 22 33 or starting a web chat at www.childrenfirst.org.uk/supportline.”
Chief Executive of Aberlour Justina Murray said: “Aberlour is delighted to receive this funding boost from the Scottish Government for our Urgent Assistance Fund.
“We know that families living in poverty particularly struggle with the cost of living during the winter months, with the post-Christmas period particularly challenging and often very bleak.
“This additional funding will be used to provide emergency cash grants via our UAF to families in desperate need for essentials like heating, food, warm clothing and bedding.
“This generous contribution by the Scottish Government will ensure that around 1,660 families living in poverty will have the basic essentials they need this winter such as food on the table, adequate clothing for their children and a warm home at night.”
The Scottish Welfare Fund is made up of two different grants (Crisis Grant and Community Care Grant) which can be applied for through your local authority and do not need to be paid back.
To apply for a grant from the Scottish Welfare Fund you must be 16 or older and on a low income or getting certain benefits.
New strategy to lift 550,000 children out of poverty by 2030 – delivering the largest reduction in child poverty since records began
Support for working families to stop children growing up in B&Bs, expanding childcare for families on UC and helping parents save up to £500 on baby formula
Families struggling with the cost of living to benefit from wider support announced at budget including £150 off energy bills, increasing the living wage by £900 a year and removal of two-child limit
Part of the Government’s plan to deliver more security, opportunity, and respect for every family across the UK
Around 550,000 children will be lifted out of poverty by 2030 – the biggest reduction in a single parliament since records began – as the Government launches its Child Poverty Strategy today (Friday 5 December).
Following the reversal of the two-child limit, the strategy tackles the root causes of poverty by cutting the cost of essentials, boosting family incomes, and improving local services so every child has the best start in life.
The strategy found that children growing up in poverty do less well in school, are more likely to be unemployed when older and earn less throughout their lifetimes. Failure to tackle this problem has been holding back the economy, as well as stifling children’s potential.
New interventions in the strategy include more accessible childcare for working parents on Universal Credit. Childcare costs are one of the biggest barriers for parents who want to work and those starting or returning to jobs can particularly struggle to cover upfront childcare fees before they receive their first payslip.
From next year, the rules will change to make it easier for new parents who receive Universal Credit to get back to work by extending eligibility for upfront childcare costs to those returning from parental leave. This will prevent new parents from facing a debt trap meaning more parents can get back to work and get on in work faster.
To support more parents with more than two children into work, families who receive Universal Credit will also be able to get support with childcare costs for all their children.
Children living in temporary accommodation are living in one of the deepest forms of poverty, this has a devastating impact, particularly on children. A stay in temporary accommodation increases a child’s experience of family disruption, missed schooling and damage to physical and mental health.
The strategy will also end the unlawful placement of families in Bed and Breakfasts beyond the six-week limit. To support this, the Government is investing £8 million in Emergency Accommodation Reduction Pilots in 20 local authorities that have the highest use of Bed and Breakfasts for homeless families – continuing the programme for the next three years.
Alongside this, the government will provide £950 million through the fourth and largest round of the Local Authority Housing Fund from April 2026 to deliver up to 5,000 high-quality homes for better temporary accommodation by 2030. Further details will be set out in the upcoming Homelessness Strategy.
A new legal duty will also be introduced for councils to notify schools, health visitors, and GPs when a child is placed in temporary accommodation, so no child is left without support. This enables health and education providers to deliver a more joined up approach to support children experiencing homelessness.
The UK Government will also work with the NHS to end the practice of mothers with newborns being discharged to B&Bs or other forms of unsuitable housing.
The government will also support families with the cost of essentials by helping families to buy more affordable infant formula. The cost of some infant formula brands has risen by 25% in two years, putting pressure on families who cannot or choose not to breastfeed.
The government will set clear guidance for retailers that – together with allowing families to use loyalty points, vouchers, and gift cards to purchase formula – could save parents up to £540 in a baby’s first year and remove unnecessary barriers for low-income families.
Taken together, the measures in the strategy will lift 550,000 children out of relative low income at the end of this Parliament, with 7.1 million children seeing household incomes rise, including 1.4 million in deep material poverty – the largest reduction in child poverty by any Government in a single Parliament.
Prime Minister Keir Starmer said: “Every child deserves the best possible start in life, with their future no longer determined by the circumstances of their birth. Yet too many children are growing up in poverty, held back from getting on in life, and too many families are struggling without the basics: a secure home, warm meals, and the support they need to make ends meet.
“I will not stand by and watch that happen, because the cost of doing nothing is too high for children, for families, and for Britain.
“This is a moral mission for me. It’s about fairness, opportunity, and unlocking potential. Our strategy isn’t just about reversing the failures of the past, it sets a new course for national renewal, with children’s life chances at its heart.”
Secretary of State for Work and Pensions, Pat McFadden said: “Tackling child poverty is an investment in working families and our country’s future.
“There is a direct link between children in poverty growing up to be adults not in work, education or training – we cannot afford to waste a generation’s potential and talents.
“Our strategy will deliver support where families need it most, giving every child a good start in life and giving them the opportunity to succeed.”
Education Secretary Bridget Phillipson said: “Child poverty is a stain on our country. I’ve seen the damage poverty does first hand, and bearing down on it sits at the very core of this government’s mission.
“This strategy, lifting over half a million children out of poverty, represents an historic moment for generations of families now and into the future.
“And whether it’s expanding free school meals, rolling out free breakfast clubs, or revitalising family services, we are determined to give every child the very best start in life.”
It comes as the Prime Minister visits a children centre in Wales today with the Welsh First Minister to meet families and children who are set to benefit from the interventions in the strategy.
It follows his visit to Glasgow yesterday where he spoke to Child Poverty Campaigners, MSPs, and other key partners to discuss the Government’s strategy to cut child poverty across the UK.
Stacey, from Changing Realities an organisation which has supported the development of the Child Poverty Strategy, discussed her experiences with the Prime Minister in Wales today. She said: “This strategy makes a good start to the essential work of addressing record levels of child poverty in this country.
“Lifting the two-child limit is a step on the road to investing in our children and our social security system, and can only be a good thing in lifting hundreds of thousands of children out of poverty.
“After championing the removal of the two-child limit over the last year, even though my own family won’t benefit it is great to finally feel listened to and knowing the difference this change will make.
“As a parent who knows first-hand the harm poverty causes, I stand ready and determined to continue the work required to ensure that no child in this country faces poverty. I call on all of us to do the same.”
Shortly after the election, the Prime Minister set up the Child Poverty Taskforce to bring together government and experts to explore how Government could use all its available levers to drive down child poverty.
This strategy is the first step on our road to ending child poverty and delivers on the commitment to reduce child poverty this parliament.
It comes as child poverty levels in the UK has reached a historic high. Today, 4.5 million children (around 31%) are living in relative poverty after housing costs, 900,000 more since 2010/11. Around 2.6 million children are growing up in households without enough food, and last year 1.1 million relied on food banks.
In England alone, more than 172,000 children are living in temporary accommodation and three quarters of children in poverty now come from working families.
Children growing up in poverty are more likely to not be in education, employment or training as an adult, earn less than their peers and less likely to achieve good GCSE results or do well at school.
Acting now will cost significantly less than the long-term consequences of poverty.
Tackling child poverty is not just a moral imperative – it is an investment in Britain’s future.
That’s why the Labour government is reversing the two-child limit in Universal Credit – a failed policy experiment that punished children and been one of the biggest drivers of hardship since its introduction in 2017.
The majority of families who will gain from the removal of the limit are in work. Around 300,000 children are in poverty directly because of this policy, equivalent to 100 children pushed into hardship every day. Without intervention, 150,000 more would have fallen into poverty by 2030.
Removing the two-child limit is the most cost-effective way to drive down child poverty rates – lifting 450,000 children out of poverty in the final year of this Parliament, rising to 550,000 alongside other measures such as the expansion of free school meals, help with energy bills and the government’s childcare offer.
Priya Edwards, senior research and policy manager at Save the Children UK, said: “Families will be better off under this plan with 7.1 million children seeing their household incomes boosted by the end of this Parliament.
“Scrapping the two-child limit to benefits, expanding free school meals, and increasing childcare support for families including for those returning to work after maternity leave are bold measures to improve childhoods’ – not the sticking plaster measures of the past.
“Ministers involved in creating the strategy listened extensively to children impacted by deep poverty over many months and we hope this way of working is used as a blueprint for creating policy in future that impacts young people.
“We welcome this expansive and historic plan, and we look forward to seeing the difference it can make to children’s lives in the years to come.”
Dame Clare Moriarty, Chief Executive of Citizens Advice, said: “here is no excuse for child poverty, which damages countless children’s lives every single day. This is the moment when we must draw a line in the sand – and as a country do everything in our power to turn the tide for children growing up in poverty and hardship.
“We applaud the publication of this Child Poverty Strategy. If fully delivered, the commitments made today have real potential to transform children’s lives. Our focus now is on ensuring these promises translate into action on the ground, helping to put food on tables, stability in households and hope back into children’s lives.
“We stand ready to work with government to help make that happen.”
The Joseph Rowntree Foundation said: “This morning, the government published its full Child Poverty Strategy, setting out plans to reduce hardship for children growing up in the UK by the end of the parliament.
“It’s a crucial commitment to delivering on one of their central manifesto promises.”
For the first time, this government will also target reductions in deep material poverty as part of the strategy, which goes beyond a family’s income, to understand children’s experience of poverty and measures the number of children in the UK who are going without essentials such as three meals a day or growing up in a damp-free home.
Two million children (14%) are currently in deep material poverty, lacking at least 4 of 13 essential items.
This is a UK-wide strategy, with ministerial roundtables in Scotland, Northern Ireland and Wales which were attended by ministers of the respective nations, and ministers and officials having visited all the regions of England to meet with key child poverty representatives and visit frontline delivery projects.
Respecting devolution settlements and complementing work that is already underway in nations and regions is central to this strategy. Each nation has its own distinct devolution settlement which sets out powers to tackle child poverty.
These powers vary across nations, with some levers being devolved to the governments of Scotland, Wales and Northern Ireland, while others remain reserved to the UK government.
Devolved governments also receive funding through the Barnett formula.
Scottish families will benefit from a Budget to cut the cost-of-living, create more high skilled jobs and invest in public services, as the Chancellor reaffirmed her commitment to drive economic growth.
Chancellor announces fair deal for working families with removal of two-child benefit cap, energy bill saving and fuel duty freeze
Scottish industry backed by investments in Grangemouth, Greenock, Leith and Fife
Public services backed with extra £820 million for Scottish Government
Rachel Reeves recognised Scotland’s huge £204 billion annual contribution to the UK economy with investments in Grangemouth, Greenock, Leith and Kirkcaldy, and provided long-term certainty to the oil and gas industry to support North Sea jobs and investment.
Despite wages growing more in the first year of this government than at any point in the 2010s, the Chancellor was clear too many families are still struggling with the cost of living which is why the Budget included a range of measures to cut bills and boost pay packets.
Saying that the fairest way to help people with the cost-of-living was to cut inflation and increase wages, Reeves announced £150 off energy bills, a fuel duty freeze, and national minimum and living wage rises.
The Chancellor announced the removal of the two-child limit. 95,000 children in Scotland will benefit from this change. Funded by tackling welfare fraud and long-overdue reforms to the Motability scheme, it will result in the biggest reduction in child poverty at any Budget this century.
The Chancellor’s Budget also ensured that Scottish public services are fairly-funded, with an extra £820 million for public services in Scotland through the Barnett Formula, on top of a record settlement in June.
Secretary of State for Scotland, Douglas Alexander MP said: “This is a Budget which delivers for Scotland – raising children out of poverty and helping tackle the cost of living for working families with action on energy bills.
“Scrapping the two-child benefit cap will lift thousands of Scottish children out of poverty. Funded by raising online gambling taxes and tackling welfare fraud, it will result in the biggest reduction in child poverty at any Budget this century.
"This is a budget that we were determined to deliver and to make sure address the priorities and the needs of the people of Scotland."
“The UK Government has backed Scotland’s public services with an extra £820 million — on top of the extra annual £9.1 billion already committed at the Spending Review.
“The £14.5 million announced for Grangemouth is also vital investment in Scotland.”
Ms Reeves also announced reforms to modernise the tax system, asking those with broader shoulders to contribute more through long-overdue fair reforms.
Backing Scottish industry
£14.5 million will back Grangemouth’s transition to a hub for low carbon technologies as the UK Government cements Scotland’s place as the home of the UK’s clean energy revolution.
A further £20 million for Inchgreen near Greenock will upgrade the port’s dry dock, creating up to 1,750 jobs.
Up to £20 million will transform Kirkcaldy town centre and waterfront, including the creation of ‘Adam Smith Growth Works’, boosting local business and tourism.
£25 million will be released following the full sign-off of Forth Green Freeport – spanning Leith, Grangemouth and Fife.
To support oil and gas workers, the UK Government is introducing ‘Transitional Energy Certificates’ to manage existing North Sea fields for the entirety of their lifespan, and a new Jobs Brokerage Service – offering end-to-end career transition support.
Tackling child poverty, the cost-of-living and economic inactivity
95,000 children in Scotland will benefit from the removal of the two-child limit.
Raising the National Living Wage by 4.1% and the National Minimum Wage by 8.5% —building on April 2025 increases to the National Living Wage and National Minimum Wage that already directly benefitted 220,000 workers in Scotland.
Uprating Universal Credit Standard Allowance by 6.1%, the first ever permanent real terms increase.
Increasing the State Pension by 4.8% from April 2026, directly raising incomes for 1.1 million pensioners in Scotland.
Extending the fuel duty freeze and 5p cut, saving the average car driver £49 next year.
Unleashing talent and opportunity with a Youth Guarantee package. This will include ensuring every eligible 18-to-21-year-old who has been on Universal Credit and looking for work for 18 months in Great Britain will get a six-month paid work placement.
Public services investment
The Budget provides an extra £820 million for the Scottish Government to spend on its priorities such as education and tackling NHS waiting times— on top of the extra £9.1 billion already committed during the Spending Review.
The Scottish Government continues to receive over 20% more funding per person than equivalent UK Government spending across the rest of the UK reflecting the real costs of delivering services across Scotland’s diverse geography, from the Highlands to the central belt.
Holyrood: ‘Chaotic’ UK Budget fails to deliver for Scotland
Finance Secretary responds to Chancellor’s statement
The UK Budget “fails to deliver” for Scotland and will not move the dial on the cost of living for squeezed households, according to Holyrood’s Finance Secretary Shona Robison.
Responding to the Chancellor of the Exchequer’s statement, Ms Robison said: “This Budget has been absolute chaos from start to finish. Westminster has been consumed with leaks, briefings and out and out incompetence – with Scotland left as an afterthought and families left to pay the price.
“We needed a step change from the UK Government with investment in public services, support for jobs and industry in Scotland and serious action on energy bills. Instead, we got a chaotic mess and the increase in funding for the Scottish Government will not even cover half the cost of the employer’s national insurance contributions brought in this year.
“With UK energy bills £340 higher than the Prime Minister promised even after today’s announcement, the UK Government are not even trying to deliver on the their promises. It is insulting to see the UK Government stand up and trumpet a proposed reduction that does not even cover the increase since they came to office.
“It does not come close to meeting the Prime Minister’s pledge on energy bills – they have not even attempted to keep their promises.
“The electric vehicle tax is the wrong decision for motorists, the climate and for Scotland given its disproportionate impact on rural drivers.
“And there is no serious support for jobs and industry in Scotland. The Energy Profits Levy is to remain in place – risking thousands of jobs in Scotland and in the North East in particular. Yet again, Scotland is an afterthought.
“And while the moves on the two child cap are welcome, they are long overdue and the UK Government has been forced into this position by the Scottish Government and other campaigners. And without a simultaneous change to the benefit cap it falls well short of the bold anti-poverty measures we have been calling for from the UK Government.
“But the complete chaos around this Budget gets to the heart of the fact that we should not be leaving crucial decisions around the economy, public finances and household bills in the hands of a deeply incompetent Westminster UK government. We should take these decisions for ourselves with the fresh start of independence.”
The impact of the increase Employers National Insurance contributions on public services is forecast to cost the Scottish Government at least £2 billion over the next five years.
Responding to the UK Government’s Budget, Poverty Alliance Chief Executive Peter Kelly said: “The Chancellor’s decision to fully scrap the unjust two-child limit is the right thing to do.
“For eight years, this cruel policy has severed the link between what families across the country need and the support they are entitled to, pushing children into poverty and limiting their potential. Our children deserve better.
“Campaigners across Scotland have been unified in their demand to scrap the two-child limit and we are pleased that the UK Government has listened, sending a strong message that every child in this country matters. The end of this policy must be the starting point of reform which ensures that our social security system truly provides security.
“This decision also frees up money earmarked for the mitigation of the policy in the Scottish Budget. Coupled with the additional £820 million allocated to the Scottish Government in this UK Budget, this will allow further investment in the action we know is needed to meet our child poverty targets, including increases to the Scottish Child Payment.”
Commenting on the UK Government’s Budget response, Debbie Horne, Scotland Policy and Public Affairs Manager for Independent Age said: “The Autumn Budget was an opportunity to address pensioner poverty across the UK. However, the UK Government has sadly missed the chance to take action on an issue that now affects almost two million older people across the UK, including 160,000 pensioners in Scotland.
“While we welcome the retention of the Triple Lock, this measure alone does not go far enough for older people on the lowest incomes who are living across Scotland in cold homes and with not enough money to live on.
“We continue to call on the UK Government to increase the Warm Home Discount to ease the burden of escalating bills, to support older private renters by uprating Local Housing Allowance so no one has to make dangerous sacrifices to pay their rent, and to boost income through a comprehensive take-up strategy for entitlements, including Pension Credit.
“The absence of meaningful action to address later-life poverty will leave many older people on a low income in Scotland feeling forgottenand many will be worried about losing more of it in tax, because of the extension of the freeze on personal tax allowances to 2031, a year longer than was expected.
“We estimate that without decisive government intervention almost 190,000 pensioners in Scotland could be in poverty by 2040. Worryingly, nothing in this Budget suggests we are being steered away from this frightening outcome.”
Mary Glasgow, Chief Executive of Children First, Scotland’s national children’s charity said: “We welcome the UK Government’s decision to scrap the two-child limit as outlined in the Office for Budget Responsibility report. This is long overdue and frees up Scottish Government budget for other crucial support for children and families.
“Poverty has a devastating impact on children’s mental and physical health, development, happiness and ability to learn that can last a lifetime.
“Both governments must now work together to build on progress and meet the legal target to reduce child poverty in Scotland. Families need a stronger social security offer, for example, through the Scottish Child Payment and whole family support across Scotland to give every family the financial, practical and emotional help they need to tackle the root causes of poverty.
“Children can’t wait. The Scottish Government must use this opportunity to go further and faster in their stated mission to eradicate child poverty.”
Children First’s manifesto for the 2026 Holyrood elections calls on the next Scottish Government to deliver a comprehensive offer of whole family support to tackle child poverty and give every family the emotional, practical and financial support they need.
Helen Barnard, director of policy at Trussell, said: “Trussell is delighted to see the Chancellor take this bold step which will protect hundreds of thousands of children from growing up facing hunger and hardship. She has listened to the families and food banks across the UK who have been imploring her to act.
“The cruel two-child limit has driven countless families into hardship, forced to turn to food banks to survive. Today’s announcement of its full and swift removal will help ensure all our children have the best possible start in life, ease pressure on public services, and help to boost our economy.
“This government came to power promising to end the need for emergency food and reduce child poverty. Removing the two-child limit will make a vital and significant contribution towards delivering on those manifesto commitments.
“This move will pull 470,000 children out of severe hunger and hardship by 2027 and ease pressure on food banks throughout the UK.
“The government has built on positive steps in strengthening support for people facing severe hunger and hardship. But this cannot be the end. Food bank need remains well above levels five years ago and many people are still struggling to afford the essentials.
“We need more bold choices to transform lives across our communities.”
Social Security Scotland’s Scottish Child Payment is supporting 322,230 children across the country, newly published figures show.
Launched in February 2021, the Scotland-only benefit gives families with low incomes crucial financial support to help with the cost of raising children.
The weekly payment of £27.15 is paid every four weeks for every eligible child under the age of 16 within a household.
Social Justice Secretary Shirley-Anne Somerville said: “Eradicating child poverty is the Scottish Government’s top priority and a national mission.
“This support is helping parents and carers with the essential costs of raising children and is contributing to lowering child poverty rates in Scotland compared with the rest of the UK.
“That progress is the result of our decision to invest in measures that directly support household budgets and improve the wellbeing of children.
“While we should recognise the positive impact this is having for thousands of families, we know there is still much more to do. One child in poverty is one too many, and we remain firmly committed to doing everything we can to support families and give every child the best possible start in life.
“Scottish Child Payment continues to be a central part of that mission, and these figures demonstrate why this support is so important to communities across Scotland.”
One of the key decisions that UK Ministers will be making ahead of Rachel Reeves announcing the Budget later this month is what to do about the two-child limit (write Fraser of Allander Institute’s SPENCER THOMPSON and HANNAH RANDOLPH).
This policy, which limits Universal Credit to the first two children in a family, has been widely criticised for driving up child poverty rates. And given that the UK Government has pledged to reduce child poverty, with the publication of its child poverty strategy expected sometime around the Budget, the pressure is on to abolish the policy.
The Scottish Government has committed to mitigate the two-child limit by introducing a new benefit, the Two-Child Limit Payment (TCLP). If the two-child limit is abolished, this payment would no longer be needed, freeing up resource for the Scottish Government. The First Minister has pledged that the savings would be spent on additional measures to tackle child poverty, which he has stated is the Scottish Government’s top priority.
How much would the Scottish Government save?
The Scottish Fiscal Commission has forecast the TCLP will cost £155m in 2026-27. This represents the amount that the Scottish Government will directly save if the two-child limit is abolished.
There would however be some offsetting costs to the Scottish Government, coming through two main channels. First, removing the two-child limit would push more families onto the Benefit Cap – unless this was also abolished – which the Scottish Government mitigates through Discretionary Housing Payments.
And second, it would bring more families onto Universal Credit, namely those whose incomes are just too high to be entitled with the two-child limit in place.
These families would in turn become eligible for devolved benefits that are linked to receipt of Universal Credit, including the Scottish Child Payment, raising spend on these benefits.
We estimate that these spillovers would amount to around £34m in 2026-27.
Whether this cost is met from within the £155m pot or counted separately is a political question. The fiscal context, which will become even more challenging if the UK Government chooses to raise income tax in the rest of the UK, may encourage the former choice. But this would likely be seen by campaigners as penny pinching at a time when urgent, ambitious action is needed to tackle child poverty.
Even with the two-child limit abolished, we would still be a long way off meeting the statutory child poverty targets in 2030 – and these are approaching quickly, with the final Delivery Plan due in March.
How could the savings be spent?
If the spillover costs from the abolition of the two-child limit (£34m) were funded from within the TCLP budget (£155m), that would leave £121m to be spent on other policies. We have modelled the child poverty impacts of five illustrative policy options, all of which we estimate will cost about this much in 2026-27 assuming no changes in behaviour or administrative costs. Clearly, a £155m policy could go further than a £121m one, so this represents a conservative scenario.
Impacts of policy options on relative child poverty after housing costs, 2026-27
Option
Raising the Scottish Child Payment to…
…and…
… would reduce child poverty by about…
1
£35
–
1ppt
2
£31
extending Scottish Child Payment from children under 16 to include dependents aged 16-19
1ppt
3
£34
increasing Best Start Grants and Best Start Foods by the same proportion
1ppt
4
£30
extending universal Free School Meals from P1-P5 to include P6-P7
–
5
£34
increasing the maximum discount on water and sewerage charges from 35% to 100% for families with children
1ppt
Source: FAI modelling using UKMOD. Notes: Dash indicates that impact is too small to report. Scottish Child Payment is currently projected to be about £28 per child per week in 2026/27. Free School Meals count as income for purposes of measuring poverty. Technical details of modelling available on request.
The impacts of these policies would be over and above the impacts of the two-child limit being abolished, which we estimate to be around 1 percentage point in 2026-27. All else equal, each of the options would reduce relative child poverty after housing costs by a further 1 percentage point in 2026-27, representing an additional 10,000 children who would be kept out of poverty.
The exception is Option 4: extending universal Free School Meals to all primary school students would not have a measurable impact on aggregate child poverty levels, even when coupled with an increase to Scottish Child Payment of around £2 per child per week.
Although most of the policies are similar in terms of their aggregate impacts, under the surface there are some important differences:
Option 1 is the simplest, but does involve steepening the so-called ‘cliff edge’, whereby households lose their entire Scottish Child Payment award if their incomes increase beyond the point at which they are entitled to Universal Credit – which could incentivise them to forego opportunities to earn more. This option also increases Scottish Child Payment for recipients who are not in poverty, including those kept out of poverty by the payment at its current rate.
Option 2 is arguably preferrable in these respects, since it extends Scottish Child Payment to families who are not currently eligible while also benefitting many multi-child families who currently are, with the overall cliff edge not steepening as much. However, it does favour older children, when families with young children have been identified as a priority group.
Option 3 targets younger children specifically – Best Start Foods is available until the child turns three, while Best Start Grants are paid to children at various points until the child starts school. This option would also channel some of the TCLP savings into one-off grants as opposed to recurring payments, which may be less distortionary when it comes to work incentives even though they have similar eligibility criteria as the Scottish Child Payment. By the same token, their one-off, targeted nature limits their direct impacts on overall levels of child poverty.
Option 4 removes a cliff edge of sorts in the form of the means test for Free School Meals that applies to children in Primary 6 and 7, who are typically between 10 and 11 years old. Although this policy would benefit some households that lie just above current eligibility, it would primarily benefit those with higher incomes. On the other hand, the distributional impacts would depend on take-up, and there could be wider benefits such as a reduction in stigma.
Finally, Option 5 is unique in featuring a gradient across households – both because discounts on water and sewerage charges are proportionately linked to Council Tax Reduction, which tapers with income, and because these charges themselves vary by council tax band. Other changes to Council Tax Reduction would also be possible, but these will tend to extend entitlement to higher-income households rather than just benefitting current recipients, most of whom already receive a 100% reduction.
These are by no means the only options available, but they highlight some of the factors that the Scottish Government will need to weigh up when reallocating the TCLP budget, along with the potential impacts of doing so, in a scenario where the two-child limit is abolished.
Time will tell
Whether or not that that scenario will transpire remains unclear. It is possible that the UK Government will take an intermediate approach by relaxing the two-child limit in some way without abolishing it entirely – for example by exempting certain groups, moving to a three-child limit, or introducing a taper.
Mitigating the remainder of the limit would cost less than the planned TCLP – meaning there would still be some savings – but may require more time to be designed and implemented. It is also possible that the Budget will include a commitment to eventually abolish the two-child limit, but not in the coming year, meaning the TCLP would be needed temporarily.
For now, all eyes are on Rachel Reeves – but the focus will quickly turn to the Scottish Government. Keep an eye on our website and social media for more analysis of the UK and Scottish Budgets over the next few months!
